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Gold/Mining/Energy : Gold Price Monitor
GDXJ 105.33+5.2%Nov 26 4:00 PM EST
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To: The Street who wrote (66319)3/21/2001 9:22:08 AM
From: Zardoz  Read Replies (4) of 116770
 
if Gold moves 12% then Gold Stocks will move 100% or more

That statement is not true... {and I aint talking the comparison between 12% and 100%} the correlation between gold stocks and the POG is not linear. In fact it's almost non-existent. How do you explain 87 when gold stock fell 30% in a few days, and gold remained neutral... or the XAU climbing and gold falling? The ratio between Gold and Gold stocks is Not covariant; analysis of this in the past points to a third higher denominated variable called Monetary supplies. Higher degree variables are also important... and are now controlling the POG going forward. The significant of these variables are only coming to the forefront because of low inflation and low growth. Going forward, do not believe that Japanese reinflation, or US inflationary pressures can save Gold. Monetary policies in the USA are done to mitigate US dollar appreciation. If Greenspan burns M2/M3 lower, the dollar will ramp. But by keeping a close range on them, the POG will go sideways within a range. I had counted on Lower M2 MACD rate changes, but he decided stabilize the Dollar. The Japanese are playing the currency game now, and what may be seen is USA importing inflation. This is a danger sign to growth in 1.5 year time period. In 98 the lowering of rates guaranteed the boom-bust cycles was reinstated. In 2001 the slow meandering of Grenespan will ensure a world market collapses in 2003, with USA being one of the only to survive.

Hutch
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